Taipei: Shares in Taiwan closed lower as investors reacted to losses on U.S. markets overnight, driven by concerns over the job market following recent large layoffs and the valuation of artificial intelligence stocks. The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), fell by 248.04 points, or 0.89 percent, to close at 27,651.41, after fluctuating between 27,621.48 and 27,818.54. The index dipped below the nearest technical support level of 27,717, which is the 20-day moving average, with a total turnover of NT$469.02 billion (US$15.13 billion).
According to Focus Taiwan, a weak U.S. jobs report has prompted concerns among investors in the United States about the economy, impacting stock markets. In response, Asian markets, including Taiwan, followed suit. Hua Nan Securities analyst Kevin Su commented on the situation, highlighting that U.S. employers announced 153,074 job cuts last month, a significant increase from 55,597 cuts a year earlier. This news led to a 1.12 percent decline in the S and P 500 index and a 1.90 percent drop in the tech-heavy Nasdaq index.
Su noted that worries over a potential AI investment bubble continue to affect market sentiment, particularly impacting tech stocks. The electronics index fell by 0.97 percent, with the sell-off focusing on AI hardware developers. Notably, AI server maker Hon Hai Precision Industry Co. dropped by 1.61 percent to close at NT$244.00, and Quanta Computer Inc., another AI server supplier, fell by 2.05 percent to end at NT$287.00.
Graphics card vendor Giga-Byte Technology Co. and AI server manufacturer Wistron Corp. also experienced declines of 2.69 percent and 3.17 percent, respectively. Despite the overall downturn, Taiwan Semiconductor Manufacturing Co. (TSMC) showed resilience, falling only 0.34 percent to close at NT$1,460.00. Su emphasized TSMC's importance as a key AI stock with strong fundamentals.
Other semiconductor stocks faced challenges, with IC packaging and testing services provider ASE Technology Holding Co. shedding 2.35 percent, smartphone IC designer MediaTek Inc. losing 2.33 percent, and United Microelectronics Corp. ending down 1.75 percent.
Su pointed out that while tech stocks mostly traded weakly, ample liquidity allowed investors to invest in select old economy stocks with low valuations. Formosa Plastics Corp. and Formosa Chemicals and Fibre Corp. were notable gainers, rising by 3.35 percent and 2.46 percent, respectively. Additionally, Eclat Textile Co. surged by 10 percent, and Makalot Industrial Co. increased by 6.31 percent.
In the steel sector, China Steel Corp. and Chung Hung Steel Corp. experienced minor declines. The financial sector also faced challenges, with Fubon Financial Holding Co. and Cathay Financial Holding Co. closing down by 1.42 percent and 1.85 percent, respectively.
Su warned that after the Taiex fell below the 20-day moving average, the main board has turned technically weaker, indicating the possibility of further losses. According to TWSE, foreign institutional investors sold a net NT$35.37 billion worth of shares on the main board.